Challenges and Responses to Energy Supplier Regulation in Maryland

NASUCA 2016 MID-YEAR MEETING ENERGY SUPPLIER CHALLENGES AND RESPONSES IN MARYLAND Paula Carmody Maryland Office of People s Counsel June 6, 2016

2 1999 Maryland Retail Competition Law Supplier License Requirements Consumer Protection Requirements PSC Dispute Process PSC Enforcement and Remedies

3 PSC Law and Regulations License Application and Approval Evidence of technical and financial competence Certifications and affirmations by officers Consumer and environmental complaint history in other states

4 PSC Law and Regulations Consumer Protections Prohibition on unfair or misleading practices Prohibition on violations of state and federal consumer protection laws UDAP, Telephone Solicitation Act and Door to Door Sales Act Disclosure Requirements Contract Requirements

5 PSC Law and Regulations Enforcement PSC Dispute and mediation process Formal Customer complaints(appeals) PSC Show Cause Investigations OPC Complaints Office of Attorney General Investigation/complaints - violations of Consumer Protection Act (MD CPA)

6 PSC Law and Regulations Remedies PSC Law License moratoriums on new customers, suspension and revocation Civil penalties Refunds or credits to customers

7 POLAR VORTEX 2014!!!!!!!! Deep freeze in 2 dozen states

8 Spike in Energy Supplier Prices Consumer Fallout

9 $1000-$2000 Bills Who, What and Why? LESSON LEARNED This was not just a Polar Vortex issue The extreme weather and extreme bills revealed the underlying problems for consumers with supplier contracts

10 Maryland Response PSC Generic Investigation of High Bills in 2014 Winter PSC Show Cause Investigation of Several Suppliers PSC Examination of Existing Consumer Protection Regulations (PC 27 Stakeholder Process) PSC Rulemaking and Adoption of Enhancements to Regulations (RM 54)

11 Major Problems Variable rates were a primary source of high bills Non-compliance with consumer protection laws Customers had no idea what was happening with price spikes Was it the weather or something else? Deceptive marketing practices No prior notice of rate increase Contract renewals with variable rates; teaser rate contracts Lag time between billing period and receipt of bill Failures in supplier customer service and response Customers could not get through to supplier Misinformation Refusal to switch customers Lengthy times to switch back to utility or other supplier

12 Positive Outcomes Enforcement Actions - Mixed Starion Energy (pre-vortex) Findings: Violation of Door to Door Sales Act, Slamming and misrepresentation Remedies: $350,000 civil penalty Limitations on marketing in certain geographic areas Reporting requirements Xoom Energy (proposed order on appeal) Findings: Failure to provide notice of default to variable rate in renewal notice Remedies: $40,000 civil penalty; refunds to customers who filed complaints prior to December 2014) Major Energy (gas and electric) Findings: misrepresentations re: variable rates Remedies $300,000 civil penalty Temporary moratorium on door to door marketing Blue Pilot (proposed order issued; pending possible appeals) Findings: Misrepresentations and violations of Telephone Solicitation Act Remedies: License suspension $140,000 civil penalty Report resolution of PSC complainants

13 Positive Outcomes Changes to Regulations Definitions: Only customer of record (or legal rep) can enter into contract with supplier Evidence of customer consent: signature (including electronic) unless exempt from Tel. Solicitation Act Contracts Contract summary document now required Disclosures re: variable rates and access to rates in advance of new billing cycle Renewals: New notice requirements on access to actual variable rates in advance of new billing cycle

14 Positive Outcomes Changes to Regulations Advance notice of rate change is required New requirements for Supplier Agents Qualifications Training Misrepresentations Door to door activity Faster switching between supplier and utility service

15 Continuing challenges Insufficient PSC (or advocate) resources to investigate and enforce consumer protection laws PSC oversight of deceptive practices may be outside of its comfort zone Tendency to give benefit of doubt to suppliers and to assume consumers know (or should know) how energy markets and contracts work1515 Restrictions on variable rate contracts still not sufficient Supplier reliance on D2D and Telephone Sales Unfair and deceptive statements are tough to monitor Lack of a class action approach: financial relief to all customers affected by violations is not provided

16 Maryland References Laws Public Utilities Article, Sec. 7-501, 505 and 507 (electric) and 603 (gas) Comm. Law Article, Title 13 (Consumer Protection Act), Sec. 13- 301 (UDAP) and 302 (OAG Enforcement) Comm. Law Article, Sec 14-2201 (Telephone Solicitation Act) and 2601 (Door to Door Sales) Regulations COMAR 20.32 (Disputes) COMAR 20.51 (Electric supplier license) and 20.53 (Electric consumer protections) COMAR 20.54 (Gas supplier license) and 20.59 (Gas supplier consumer protections)

17 Thank you! For more information: Office of People s Counsel 6 St. Paul Street, Suite 2102 Baltimore, MD 21202 410-767-8150 www.opc.maryland.gov Paula.carmody@maryland.gov Jacob.ouslander@maryland.gov Molly.knoll@maryland.gov